a-Ajax Computer Company is an accrual method calendar year taxpayer. Ajax has never advertised in the national media prior to this year. In November of this year, however, Ajax paid $3 million for television advertising time during a "super" sporting event scheduled to take place in early February of next year. In addition, in November of this year the company paid $2,500,000 for advertising time during a professional golf tournament which will occur once in April of next year. What amount of these payments, if any, can Ajax deduct this year?

$3.00 million

No deduction can be claimed this year.

$5.50 million

$2,500,000

$5.50 million only if the professional golf tournament is played before April 15.

b- Maren received 12 NQOs (each option gives her the right to purchase 8 shares of stock for $10 per share) at the time she started working when the stock price was $8 per share. When the share price was $17 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $22 per share. How much gain will Maren recognize on the sale and how much tax will she pay assuming her marginal tax rate is 35 percent and long-term capital gains rate is 15 percent??

$0 gain and $0 tax.

$1,152 gain and $173 tax.

$480gain and $168 tax.

$480 gain and $72 tax.

C-

Carolyn has an AGI of $39,800 (all from earned income), two qualifying children, and is filing as a head of household. What amount of earned income credit is she entitled to? (Exhibit 8-10)

$3,305

$980

$4,568

$5,548

$0

D-

Jorge purchased a copyright for use in his business in the current year. The purchase occurred on July 15^th and the purchase price was $81,000. If the patent has a remaining life of 75 months, what is the total amortization expense Jorge may deduct during the current year?

$0

$6,480

$5,940

$12,960

None of these: